State ex rel. Hindin v. Hewlett-Packard Co.

• Decision Date: 13 July 2007
• Docket Number: No. A114629.,A114629.
• Citation: 153 Cal.App.4th 307,62 Cal.Rptr.3d 762
• Court: California Court of Appeals Court of Appeals
• Parties: The STATE of California ex rel. Robert HINDIN, Plaintiff and Appellant, v. HEWLETT-PACKARD COMPANY et al., Defendants and Respondents.

62 Cal.Rptr.3d 762

153 Cal.App.4th 307

The STATE of California ex rel. Robert HINDIN, Plaintiff and Appellant, v. HEWLETT-PACKARD COMPANY et al., Defendants and Respondents.

No. A114629.

Court of Appeal, First District, Division 5.

July 13, 2007.

O'Donnell & Associates, Pierce O'Donnell, Jack G. Cairl, Los Angeles, for Plaintiff and Appellant.

McKenna Long & Aldridge, Mark R. Troy, Ann G. Grimaldi, San Francisco, Eric S.C. Lindstrom, for Defendants and Respondents.

Paul D. Scott, Taxpayers Against Fraud, San Francisco, for Amicus Curiae for Plaintiff and Appellant.

The Attorney General of California, Edmund G. Brown Jr., Attorney General, Tom Greene, Chief Assistant Attorney General, Christopher M. Ames, Senior Assistant Attorney General, Larry G. Raskin, Supervising Deputy Attorney General, and Nicklas A. Akers, Deputy Attorney General, as Amicus Curiae on behalf of Plaintiff and Appellant.

Chamber of Commerce of the United States of America, National Chamber Litigation Center, Robin S. Conrad and Amar D. Sarwal; Fulbright & Jaworski, Peter H. Mason, Los Angeles, Jonathan S. Franklin, Hollywood, and Caroline M. Mew, as Amicus Curiae on behalf of Defendants and Respondents.

NEEDHAM, J.

The issue in this appeal concerns the proper interpretation of the statute of limitations for a qui tarn action brought by appellant Robert Hindin (Hindin) under the provisions of the California False Claims Act (California Act). (Gov.Code, § 12650 et seq.) We conclude that the three-year limitations period of Government Code section 12654, subdivision (a) commences in accord with the statutory language: when the claim is discovered by the "official of the state or political subdivision charged with responsibility to act in the circumstances," not by a qui tarn plaintiff such as Hindin. The statute of limitations has therefore not run in this case, and we reverse the judgment that dismissed the action as time-barred.

I. FACTS AND PROCEDURAL HISTORY

A. Facts Underlying this Lawsuit

Hindin worked for eight years as an engineer at respondent Hewlett-Packard Company (H-P).¹ In 1996, Hindin discovered that H-P was engaged in improper activities in connection with the marketing of defective medical devices, such as cardiac defibrillators, electrodes, pulse oximeters, ultrasound imaging equipment, and equipment for monitoring the administration of anesthetics.

Hindin brought to the attention of his supervisors and ultimately the president of H-P the fact that these medical devices were defective and unsafe. H-P did not take action to stop marketing the defective devices, and instead subjected Hindin to threats and reprimands. Shortly after Hindin complained about the defective medical equipment, a concealed video camera was secretly installed above his desk. Hindin ultimately brought the defects in these medical devices to the attention of the federal Food and Drug Administration (FDA) for corrective action. The FDA investigated, determined that Hindin's allegations were valid, and ordered H-P to take corrective action. Subsequently, H-P continued to harass Hindin, retaliated against him, and ultimately forced him out of his employment at H-P after he filed a lawsuit against H-P in federal court.

B. Litigation History

1. The Federal Action

In 1997, Hindin filed, under seal, a lawsuit against H-P in federal district court in Massachusetts. This federal action asserted "qui tarn"² or whistle blower claims, alleging that H-P had submitted false or fraudulent claims to the federal government regarding the safety of its medical devices, in violation of the federal False Claims Act (the Federal Act). (31 U.S.C. § 3729 et seq.) In July 2002, the United States formally intervened in the federal action, and the complaint was unsealed. The government ultimately settled the case against H-P for $7 million, apparently over Hindin's objections.

2. The State Action

In March 2002, before the settlement of the Federal Act lawsuit, Hindin filed the present lawsuit in state court in San Francisco, under the terms of the California Act (Gov.Code, § 12650 et seq.).³ The lawsuit alleges that H-P submitted false claims to the State of California regarding the marketing and sale of medical devices, including Medi-Cal reimbursement claims, allegedly causing the loss of hundreds of millions of dollars to the state, in violation of the provisions of the California Act barring false claims. The California Attorney General filed a formal notice declining to intervene in the lawsuit.

After H-P answered the second amended complaint, H-P filed a motion for judgment on the pleadings, asserting that the state action was barred by the limitations period set forth in section 12654, subdivision (a). Hindin opposed the motion. After a hearing, the trial court granted P's motion and entered a judgment of dismissal.

This appeal followed. Despite declining to intervene in the case, the Attorney General has filed a brief in this appeal as an amicus curiae, urging reversal of the trial court's ruling.

II. DISCUSSION

A. Standard of Review

Hindin's appeal raises purely legal issues of statutory interpretation. We therefore review the trial court's ruling de novo. (State of California ex ret. Nee v. Unumprovident Corp. (2006) 140 Cal. App.4th 442, 445, 44 Cal.Rptr.3d 491; Ailanto Properties, Inc. v. City of Half Moon Bay (2006) 142 Cal.App.4th 572, 582, 48 Cal.Rptr .3d 340 (Ailanto); Redevelopment Agency v. County of Los Angeles (1999) 75 Cal.App.4th 68, 74, 89 Cal.Rptr.2d 10.)

B. Background Regarding the California Act

The California Act, set forth in sections 12650 through 12655, is intended to "`supplement governmental efforts to identify and prosecute fraudulent claims made against state and local governmental entities.'" (American Contract Services v. Allied Mold & Die, Inc. (2001) 94 Cal. App.4th 854, 858, 114 Cal.Rptr.2d 773; Rothschild v. Tyco Internal (US), Inc. (2000) 83 Cal.App.4th 488, 494, 99 Cal. Rptr .2d 721.) In general, the California Act permits a governmental agency, or a qui tam plaintiff bringing an action on behalf of the governmental agency, to recover civil penalties and damages from any person who, for example, knowingly presents to the state or one of its political subdivisions a false claim for payment or approval. (§ 12651, subd. (a)(1).)⁴ The California Act was patterned in part after the Federal Act. (See Rothschild, supra, at p. 494, 99 Cal.Rptr.2d 721.)

Section 12652 sets forth three ways in which a lawsuit under the California Act may proceed. First, the Attorney General "shall diligently investigate" false claims involving state funds and may bring an action against violators. (§ 12652, subd. (a)(1).) Second, the prosecuting authority of a political subdivision "shall diligently investigate" false claims involving political subdivision funds and may bring an action against violators. (§ 12652, subd. (b)(1).) Third, a private person may bring an action, on behalf of himself as well as the state or political subdivision. (§ 12652, subd. (c)(1).) The private party is referred to as the qui tam plaintiff. (Ibid)

Where, as here, a qui tam plaintiff has initiated the lawsuit, the complaint is sealed until the Attorney General or political subdivision decides whether to intervene and proceed with the case. (§ 12652, subd. (c)(2).) Specifically, the qui tam plaintiff serves the Attorney General with a copy of the complaint, along with a written disclosure of material evidence and information in support of his contentions. (§ 12652, subd. (c)(3).) If the matter involves only state funds, the Attorney General decides whether to intervene and proceed with the action. If the matter involves political subdivision funds, the Attorney General forwards a copy of the complaint and evidence to the political subdivision, which decides whether to intervene and proceed with the action. (§ 12652, subd. (c)(4), (7),(8).) If the Attorney General or political subdivision, as applicable, declines to intervene, the complaint is unsealed and the qui tam plaintiff may conduct the action. (§ 12652, subd. (c)(7)(D)(ii), 8(D)(iii).) The complaint is then served on the defendant. (§ 12652, subd. (c)(9).) The qui tarn plaintiff is entitled to a percentage of any recovery obtained in the litigation. (§ 12652, subd. (g)(2)-(5).)

C. The Statute's Plain Language Indicates the Action is not Barred

The relevant statute of limitations for Hindin's claim under the California Act is found in section 12654, subdivision (a), which provides: "A civil action under Section 12652 may not be filed more than three years after the date of discovery by the official of the state or political subdivision charged with responsibility to act in the circumstances or, in any event, no more than 10 years after the date on which the violation of Section 12651 is committed."

H-P contends, and the trial court ruled, that this action, was barred under the three-year rule in section 12654, measured from "discovery by the official of the state or political subdivision charged with responsibility to act in the circumstances." H-P maintains that Hindin himself is "the official of the state or political subdivision charged with responsibility to act in the circumstances" and that Hindin obviously knew the relevant facts more than three years before he filed this action. By contrast, Hindin contends the action is not barred because he is only a private individual, and not "the official of the state or political subdivision charged with responsibility to act in the circumstances."

In determining what the Legislature intended in section 12654, subdivision (a), we must first look to the words of the statute "because they generally provide the most reliable indicator of legislative intent." (Hsu v. Abbara (1995) 9 Cal.4th 863, 871, 39 Cal.Rptr.2d 824, 891 P.2d 804.) If the statutory language is clear and unambiguous, our inquiry ends: "If there is no ambiguity in the language, we pr...